MercoPress. South Atlantic News Agency

Inter American bank does not trust Argentine official stats, uses private estimates

Eugenio Diaz-Bonilla: 20% inflation is too high, “we would like one digit inflation”

Argentina must solve the controversy over the measurement of inflation which has significant economic and political costs, said Eugenio Diaz-Bonilla the Inter American Development Bank, IADB, director for Argentina and Haiti.

“We need to solve the conflict surrounding inflation stats”, said Diaz-Bonilla during discussions at the Inter American Dialogue in Washington. “The controversy has many political, economic and institutional costs” added the economist who revealed he has addressed the issue with Argentine officials.

According to Argentina’s discredited National Stats and Census Institute, Indec, inflation in 2011 was 9.5%, but private consultants put the figure at 22%, and this is the percentage on which for example the unions negotiate salaries. Likewise some provinces ruled by the opposition also have similar two-digit measurements.

Last week The Economist said it would no longer take into account Indec stats and clearly called on the government to ‘stop manipulating percentages” because they are not to be trusted.

“20% it too high, we would like to see a one digit inflation”, said Diaz-Bonilla. “We must move towards an inferior convergence in prices”. He also admitted that the IADB takes into account the private estimates.

Last February the IMF established a six months period for Argentina to adapt inflation and GDP measurements to ‘international criteria’.

On request from the Argentine government, IMF last year made a series of recommendations to implement a new national index of prices, but the proposal did not receive much support or advance.

The United States has also criticized the Argentine position regarding the measurement of inflation, GDP and its policy on holdouts of the 2001 massive sovereign default.

However Diaz-Bonilla also praised Argentina’ current growth period with minimum volatility, which he said is helping to set the foundations for the country to become a developed economy in a decade’s time.

During the discussion on “The Argentine economy in the short and medium term”, Diaz Bonilla said the current eight years of sustained strong growth are “the second best in the 200 year history of the country”

“We have to go back to the end of the XIX century for a similar period of sustained growth, but even so that period, according to the historic stats, was far more exposed to volatility”, said Diaz-Bonilla.